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X Space Review | BIO Listed on Binance Sparks New Craze, How Should We Pay Attention to Alpha in the "DeSci Season"?
With Bio Protocol launching on Binance, the DeSci track is gradually receiving more attention. On December 27, BlockBeats invited key figures in the DeSci track, including Bio Protocol co-founder Paul Kohlhaas, Pump Science co-founder Benjels, VitaDAO founder Alex Dobrin, to discuss the topic "BIO Launches on Binance, How Should the DeSci Season Find Alpha," shedding light on how the DeSci track should focus on Alpha.
BlockBeats: First, please briefly introduce yourselves and share how you came into contact with and joined the DeSci track?
Paul Kohlhaas: Thank you for BlockBeats' invitation. I am delighted to share in this Space and deeply appreciate the welcome from the Chinese community and the broader Asian community. I am excited to chat with everyone about DeSci. I believe DeSci has great potential in the Asian community because many scientists at Asian universities are native Chinese, Japanese, or Korean speakers. Due to language barriers, their scientific research and innovations have not yet been discovered.
I have a background in science. During my youth, I spent a lot of time researching online biology communities, such as Reddit forums. Later, I focused on studying drugs that enhance intelligence, longevity, diabetes medication, etc., all of which I found fascinating. In college, I majored in economics, and during that time, I also traded biotech stocks. Biotech stocks are quite different from online biology communities because biotech data is very scarce and considered confidential information. Typically, I would trade based on the speed of a company's funding. These companies release positive or negative data every three to six months. When data is released, the stock can go up fivefold or drop 90% in a single day. This is very similar to the situation in cryptocurrency. But I think this system is really inefficient compared to an open-source community.
Around 2014, I discovered Bitcoin and later engaged in the online cryptocurrency community. In 2016, I began researching Ethereum. Subsequently, I founded my first company and went to work at ConsenSys in 2017. I got into cryptocurrency very early, around the time of the first ICO boom. During that time, I did a lot of work in encrypted data, such as how to encrypt data on-chain and attach it to a wallet. I remember when CryptoKitties emerged, I asked myself, what if we attached medical data or intellectual property to an NFT instead of just cat or monkey patterns?
In 2018, I helped launch VitaDAO and was also one of the whitepaper authors. Since then, I have always dreamed of making a mark in the DeSci field. VitaDAO is dedicated to creating an on-chain portfolio specifically for longevity research, particularly focusing on democratizing life extension methods. After launching VitaDAO, we realized this was a replicable framework. Many founders, patients, and entrepreneurs came to us saying, "Why don't we establish a DAO for hair loss research or fertility research?" We took the suggestion and took action in 2022 and 2023. This also gave rise to many DeSci DAOs we see today, and Bio.xyz and bio Protocol were born from this.
Benjels: I'm Benjels, and my background may be more traditional. I have a focus on the field of bioengineering and have always been very passionate about the intersection of biology and computer science. I believe there are many similarities between computer science and biology. Just as you program on a computer using a programming language, we are now increasingly able to program biology at the genetic level. So my interest in this intersection has always been significant because of its immense potential.
My first job was in the genomics field, where I worked in oncology focusing on cancer diagnostics. I found this field very fascinating and learned a lot there, especially about genomics. But I found an issue where much of the patient data we accumulated from doctors was being sold to large pharmaceutical companies, making hospitals a lot of money, but patients were not benefiting from it, which was very unfair.
I have always had some interest in cryptocurrency, and I came into contact with cryptocurrency around 2017, always looking for ways to combine blockchain and biotech. Initially, I thought this combination would manifest in the realm of health data. At that time, I hoped some projects could find ways to put health data on the blockchain, allowing people to own and even sell the data. However, most projects failed. So I continued down the more traditional path of biotech and later joined a biotech-related venture capital fund.
Later on, I discovered Molecule's Deck, which completely changed my perspective. I got to know DeSci and the concept of IPNFT, which is the tokenization of drug intellectual property, the most valuable part of the medical field, bringing value to patients that can be described as killer. The reason I truly decided to join this field was realizing that if any approved drug could be tokenized into an IPNFT, its value would undoubtedly surpass other NFTs.
As far as I know, the most expensive NFT should be the one created by Beeple, valued at $70 million. And $70 million is very cheap for a drug research. Realizing the huge opportunity in DeSci made me very excited. In 2022, I left a venture capital fund to join Molecule and work with the biology team.
Alex: I have spent almost my entire career working in the financial sector, starting out at a hedge fund, where I was responsible for applying machine learning techniques in the field of data science. When I first encountered blockchain in 2016, I was primarily doing tech-related work, trying to understand the potential impact of cryptocurrency on the companies we were investing in. A month later, I started putting my personal income into this field, went through the ICO craze and NFTs, and in 2020, I began focusing on venture capital. I worked at a small family office in Switzerland for a few months, then joined Switzerland's largest crypto asset management company, so for the past three and a half years, I have been involved in venture capital.
In 2022, if I remember correctly, I met Paul, who introduced me to the project. I was very interested in their mission and vision. Additionally, I have always been a biohacker for 10 years. The fusion of computer science, blockchain, and biohacking is very exciting to me. So I decided to dedicate all my energy to the DeSci field and joined VitaDAO.
BlockBeats: Asking Benjels, why did you choose to do Pump Science? What were your intentions?
Benjels: The main reason is that I wanted to return to the fundamentals of cryptocurrency, which also includes individual speculation. I believe the DeSci field is too focused on esoteric scientific research, which is very complex and understandable only to true scientists, while ignoring the pure speculative desires of many cryptocurrency users. In order to make science more accessible to ordinary crypto users, we created a speculative environment around a longevity experiment, not just an experiment that scientists can understand, but also one that ordinary users can understand. Our idea is to simplify research, make it easier to understand, more speculative and appealing to a wider audience of cryptocurrency users. This is a key reason why we launched this project.
Another reason is that we have seen other projects use Bonding Curves and successfully issue tokens, continually lowering the cost of launching a project. Just as someone can easily issue tokens using Pump.fun, we hope to make launching a scientific experiment just as easy. Science is very difficult for most people, and most people cannot launch a scientific experiment. This limits the opportunity for science to be discovered by the public. By simplifying the process of launching experiments, we believe that more and better ideas will be realized, scientific experiments will become simpler, accessible to anyone, and produce more high-quality research results. These are a few key reasons why we launched the project.
BlockBeats: What are the differences between the new BioDAO and the existing BioDAO, and what are the different ways to participate?
Paul Kohlhaas: When CZ and I met in Bangkok, he asked me a question. He asked how many BioDAOs already have access or how many of these DAOs typically appear each year. I said there are probably about 6 to 7 each year. He said, "So few." This made me think. Establishing a DAO is very difficult for a small team, but not hard if it's done by a large community of token holders. We now have DAO 1.5 or rather 2, some flagship DAOs like the upcoming Long COVID Labs launching in early January, as well as a Quantum Biology DAO that already has participation from former MIT scientists. We also have Curetopia, which has been featured on Bio Protocol's Launchpad.
The exchange with CZ was very inspiring to me. Fundamentally, there are already hundreds, even thousands, of scientific fields and different scientific communities in the world that we can build DAOs around. In the past, the limiting factors were setting up tokenomics, fundraising or Genesis auctions, assisting in branding the DAO, and building the community, although none of these are difficult, they are all manually done. However, in the design of the Bio Protocol with the Launchpad included, many steps and processes will become automated.
We currently have 3 flagship DAOs that follow a hybrid approach, between the Launchpad model and the old model. As we transitioned to the Launchpad, we already received applications from over 100 teams worldwide, and we are very confident in these teams, with in-depth investigations into 20 to 30 teams. Among these teams, there are already about 10 in a prepared acceptance status. People have not yet realized that as we move towards the Launchpad, the speed of these DAO launches will be faster than before. In addition to the three DAOs mentioned above, it is expected that around 10 new DAOs will go live on the Launchpad at the end of January. At least 10-20 DAOs will launch this quarter or the next. The design of the Launchpad is more like Virtuals Protocol, used for deploying AI Agents.
Many people are more familiar with Daos.fun, where you will see a leaderboard, and the various DAOs on the leaderboard will trade based on the Bonding Curve. Bio Protocol also has a leaderboard. The model of the Launchpad is that BIO token holders can unlock DAO by staking tokens to support the DAO's entry into the Launchpad. Once this DAO enters the Launchpad launch, their tokens will have liquidity and can trade along the Bonding Curve. The Launchpad is used to raise funds, consolidate the DAO's position on the leaderboard. Therefore, early-stage DAOs may be at the bottom of the leaderboard, and the higher-ranked DAOs will receive more traffic from Bio Protocol and the community. Once a DAO reaches the top of the leaderboard, Bio Protocol will automatically deploy a liquidity pool, which is jointly owned by Bio Protocol and the DAO.
At this point, it is a fully autonomous system. Previously, establishing a DAO through the bio.xyz incubator we built would typically take 3 to 6 months, sometimes even up to 9 months, as the incubator's approach was rate-limited. With this new design, the speed of setting up a DAO is very fast, usually a DAO can go through Launchpad and reach the top of the ranking in 3 to 4 weeks.
In the weeks following the TGE, we will start announcing some new DAOs, which the team has actually been actively building. If you are a BIO token holder, around the end of January, you will be able to officially start funding these DAOs, where you can stake BIO tokens to support them. In summary, Bio Protocol is moving towards a decentralized Launchpad, and the user experience may be more like that of Virtuals Protocol. This innovative design creates more liquidity between different DAOs. For example, as a BIO token holder, you can support four, five, six different DAOs, maybe you are a community member of one DAO and perhaps another DAO you are in has not yet created a certain tool or framework.
I think what these DAOs need most right now are people with rich experience in Web3, people who can design economic models, and people who can build communities. Because many users are scientists or patients new to Web3, they may be using Bio Protocol for the first time, downloading a wallet for the first time, or even using Discord for the first time.
BlockBeats: What are the graduation criteria for BioDAO on Launchpad? What role does the BIO token play in it?
Paul Kohlhaas: I believe the "graduation" market cap of the Bio Protocol ecosystem's DAO token will definitely be higher than that of other systems like the Pump.fun token. When a Meme is successfully deployed on Pump.fun, once the token's market cap reaches $69,000, Pump.fun's liquidity will automatically be added to Raydium. Pump science will actually build a similar system as well. Taking Bio Protocol as an example, the "graduation" market cap of the token is approximately between $10 million and $20 million, and it could be even lower, around the range of $6 million to $12 million.
Our tokenomics team is currently designing the tokenomics and it is almost finalized. The Launchpad code is also in full development and is expected to enter the audit phase in about two weeks. The tokenomics is also in its final stages of determination. In general, we are considering a "graduation" market cap range for the token between $6 million and $12 million, possibly up to $20 million. We are also conducting some experiments, hoping to create a low slippage system.
On one hand, the DAO on Bio Protocol is actually funded through a Bonding Curve. All funds raised by Pump.fun are used to provide liquidity to the AMM pool. Unlike Pump.fun, part of the funds raised by Bio Protocol will be used to support some scientific research. We believe that Bio Protocol actually plays an important role in protecting users. If you quickly deploy an AMM pool, users may not be well protected. Through this innovative design, we aim to ensure that funds from any user in a BioDAO are protected. I think for DeSci, avoiding excessive pumping is quite important. That's why we believe that reaching a higher market cap over a longer period through a Bonding Curve can actually prevent excessive pumping. If you join our community, you can participate in discussions on many governance proposals and tokenomics design topics. In about one to two weeks, we will release the final design of the Launchpad.
How does Bio Protocol increase liquidity? In fact, the mechanism of Bio Protocol is very similar to that of Virtuals Protocol. BIO will also operate as a trading pair for the AMM. For example, in the new Launchpad design mechanism, once Bio Protocol starts minting tokens, we will gradually begin to pair assets like VITA with BIO, and we will also pair many other BioDAO tokens. The result of this is increased on-chain liquidity for the tokens. So, we believe that Bio Protocol will have very deep liquidity. A significant amount of funds raised in the Genesis will be used to create a very deep Ethereum liquidity pool in the Bio ecosystem. Of course, Bio also has the partner Binance, so the depth of liquidity is remarkable.
In reality, many BioDAOs do face the issue of liquidity depth. For example, HairDAO or AthenaDAO, or some other DAO tokens, have relatively small market caps, and they lack major liquidity providers or market makers. So Bio takes on this role, acting as a friendly market maker. By pairing the BIO token with various DAO native tokens, very deep liquidity can be provided. This liquidity is very effective, and we also have very deep liquidity for BIO-ETH and BIO-USDT pairs on other platforms.
BlockBeats: How was the tokenomics of Pump Science designed and considered?
Benjels: Let me first explain what Pump Science is. The original intention of Pump Science was to become a launchpad for scientific experiments, just like Pump.fun is a launchpad for memes. Similar to how Bio Protocol is the curator of BioDAO, Pump Science is the curator of experimental research.
We have a mechanism similar to Pump.fun because our experimental costs are very low in the early stages, with experiments costing around $300 to $500. Our tokenomics are also similar to Pump.fun, with the token's initial market cap being around $5000, reaching approximately 85 SOL when the token "graduates." We retain these mechanisms because users are very familiar with them, and we can afford it since the funding for each experiment is actually very low. However, we have differences from Pump.fun as well.
First is token migration. We do not migrate all 85 SOL to the AMM to increase liquidity; instead, we retain 3 SOL to fund experiments. When liquidity is migrated from the Bonding Curve to the AMM, for Pump.fun, 80% of the tokens are issued on the Bonding Curve, and 20% are migrated to the AMM for liquidity. What we do is issue 80% of the tokens on the Bonding Curve, migrate 15% to the AMM, and retain 5% for Pump Science token holders.
The first two tokens issued by Pump Science are RIF and URO, and more tokens will be launched in February 2025. Our idea is to reward users holding the old tokens with 5% of the new tokens launched on the Launchpad in the future. The purpose of this is to create a loyal user base, make them excited about the new tokens launched on the platform, and incentivize users to continue exploring valuable tokens on Pump Science. By incentivizing users to hold more tokens, each time a new token is launched, holders of the old tokens will receive a reward. This is another significant difference between us and Pump.fun.
Finally, two points are crucial. A brilliant move by Pump.fun is the burning of LP tokens, a mechanism that prevents liquidity from being drained from the AMM. Essentially, you cannot drain liquidity from the AMM pools created by Pump.fun. Another AMM liquidity provider on Solana, Meteora, allows for LP tokens to be locked but not burned, a mechanism that ensures liquidity cannot be drained, and gas fees can be used to fund productive activities. For us, that productive activity is scientific research. Therefore, what we are doing is providing funding for scientific research without any fundraising, with approximately 0.25% of the fees going towards scientific research.
The final distinction is how to deal with bots. There are many different ways to build a token issuance platform to mitigate the risk of bots buying a large amount of tokens. Daos.fun's approach is to create a whitelist, where having whitelist status allows you to acquire a large amount of tokens, thus combating bots. On the other hand, what we have done is initially set a very high fee that decreases gradually after token issuance. The fee is set high initially to deter bot sniping, but then decreases over time. Although the fee reduction is relatively fast, it is still slow for users so that regular users can compete with bots. We believe this is a fairer mechanism that allows users to compete with bots on the token issuance platform. Users of Pump.fun are well aware that bots are a significant issue.
In summary, I believe that what most users care about is the continuous yield of holding RIF and URO. Our concept is that the more RIF and URO tokens you hold, the longer you hold them, the more airdrops you will receive in the future, with a 5% airdrop allocation for each new token launch.
BlockBeats: How is the weighting of future airdrops allocated? For example, will users holding RIF or URO potentially receive more airdrops than holders of other tokens?
Benjels: It is based on the weighted average holding amount, specifically the time-weighted average holding amount. However, we are still deciding on the duration, which may be around 60 days. For holders of RIF and URO (the earliest issued tokens), they will receive more airdrops compared to holders of other tokens, resulting in greater benefits for these holders. Everything is based on the token's holding value and is a time-weighted average value. This continuous incentive mechanism will create loyal users, motivating them to constantly seek out new projects.
BlockBeats: Pump Science and VitaDAO have collaborated, are there any noteworthy experiments within the ecosystem? Will there be more collaborations or interactions between Pump Science and Bio Protocol in the future?
Benjels: Around February, we will be launching approximately 10 to 20 new drugs and related tokens, which are part of a drug list curated by the VitaDAO community. The "Longevity Prize Fund," also organized by the VitaDAO community, has garnered support from Vitalik and many prominent figures in the crypto space, primarily rewarding researchers working on defeating aging-related diseases. These drugs are also within the scope of research funded by the "Longevity Prize Fund." These are all community-planned and proposed methods that may extend life expectancy. We have selected some from the full list they submitted and are launching some of these compounds as tokens on Pump Sciences. Users and anyone interested can directly fund these experiments on Pump Science.
Not only can people participate financially, but if there are scientists or longevity enthusiasts in the community, or compound developers, they can also apply to join our drug testing experiment. We believe decentralization is very important, as Paul said, to prevent FOMO behavior in the DeSci field. We want to ensure that at least the first batch of projects launched is of high quality, with professional developers and founders supporting them.
In fact, Pump Science and Bio Protocol systems have a lot in common. Bio Protocol focuses on building a community around different research areas, such as the longevity community. Bio Protocol plays a crucial role in the DeSci ecosystem, acting like a funnel attracting talent. Pump Science is akin to the execution layer of scientific experiments, aiming to be a global laboratory and data network supporting these communities in conducting independent experimental research.
Using a sports analogy, I think Bio Protocol is like creating a team, while Pump Science is akin to the television network, broadcast services, scoring system, and sports betting market. Without a team, there is no sports game, similarly, without scoring and broadcasting, sports cannot exist. Therefore, both need to coexist to make the entire ecosystem more complete. Our goal is to create two interdependent and highly collaborative systems, which are essential parts of attracting more scientists into the DeSci field.
BlocBeats: As a community at the elder level in the DeSci field, VitaDAO has recently partnered with many communities. What other attempts will VitaDAO make in the future, and how will it attract more attention?
Alex: VitaDAO has recently established close collaborations with CUDIS and Pulse, bringing wearable devices to mind. When you think of wearable devices, these two projects may come to mind. I think the collision between DeSci and DePin will produce many interesting chemical reactions and applications. The community can use these wearable devices to collect user data, which can then be used for some experimental research, and the community can conduct research using biological marker data.
I see DeSci and DePin as a synergistic dynamic relationship. Pump Science can be seen as a global laboratory network, imagine anyone contributing data, anyone can conduct experiments with this data. In my view, this is decentralized science, it is self-conducted scientific research.
One of VitaDAO's current focuses is to attract more top scientific talent. While we have successfully attracted cutting-edge talents like Michael, we still need more individuals to pass on their expertise to a wider community. Additionally, improving user experience is an aspect we need to address, and further enhancing the research quality of these projects is also one of our key priorities. Next year, we may conduct human experiments, and we are also advancing animal experiments or worm experiments, which are related to Pump Science and are also our main goals for 2025.
We also plan to collaborate with Pump Science to conduct some experiments to test drugs developed in the lab. These drugs have shown initial effectiveness in inducing autophagy. We will later test the drugs in worms, and the results will be shared with the community. Finally, I want to talk about the product. VitaDAO has already released VD001, which is a longevity product. Although it has not been officially launched yet, the product has been produced and will be shared with the community at this year's Devcon conference. We plan to presale this drug early next year and first open it to community members.
BlockBeats: Earlier, there was mention of the DeSci community needing more high-quality scientists, especially from the Asian community. I would like to take this opportunity to discuss everyone's views on the Asian community.
Paul Kohlhaas: In fact, we have previously invited scientists from the Asian region to submit research proposals directly to Molecule. Molecule provides funding for DAO's scientific research, and we partnered with Sora Ventures to launch over $50,000 in grant awards specifically for Asian scientists. However, we received almost no applications, but the situation has since improved. We are also very willing to have Korean scientists join as Korea has many excellent drug development projects. Of course, there are also many outstanding scientists in China and Japan. So far, we have received very few applications from the Asian community. If you know any researchers in universities seeking funding support, please contact us. We also hope to see more Asian scientists and even patients get involved.
Space Link: https://x.com/i/spaces/1lDGLlpDmbaGm
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$COIN Joins S&P 500, but Coinbase Isn't Celebrating
On May 13, S&P Dow Jones Indices announced that Coinbase would officially replace Discover Financial Services in the S&P 500 on May 19. While other companies like Block and MicroStrategy, closely tied to Bitcoin, were already part of the S&P 500, Coinbase became the first cryptocurrency exchange whose primary business is in the index. This also signifies that cryptocurrency is gradually moving from the fringes to the mainstream in the U.S.
On the day of the announcement, Coinbase's stock price surged by 23%, surpassing the $250 mark. However, just 3 days later, Coinbase was hit by two consecutive events: a hack where employees were bribed to steal customer data and a demand for a $20 million ransom, and an investigation by the U.S. Securities and Exchange Commission (SEC) into the authenticity of its claim of having over 100 million "verified users" in its securities filings and marketing materials. These two events acted as mini-bombs, and at the time of writing, Coinbase's stock had already dropped by over 7.3%.
Coincidentally, Discover Financial Services, being replaced by Coinbase, can also be considered the "Coinbase" of the previous payment era. Discover is a U.S.-based digital banking and payment services company headquartered in Illinois, founded in 1960. Its payment network, Discover Network, is the fourth largest payment network apart from Visa, Mastercard, and American Express.
In April, after the approval of the acquisition of Discover by the sixth-largest U.S. bank, Capital One, this well-established digital banking company of over 60 years smoothly handed over its S&P 500 "seat" to this emerging cryptocurrency "bank." This unexpected coincidence also portrayed the handover between the new and old eras in Coinbase's entry into the S&P 500, resembling a relay race scene. However, this relay baton also brought Coinbase's accumulated "external troubles and internal strife" to a tipping point.
Over the past decade, cryptocurrency exchanges have been the most stable "profit machines." They play a role in providing liquidity to the entire industry and rely on trading fees to sustain their operations. However, with the comprehensive rollout of ETF products in the U.S. market, this profit model is facing unprecedented challenges. As the leader in the "American stack," with over 80% of its business coming from the U.S., Coinbase is most affected by this.
Starting from the approval of Bitcoin and Ethereum spot ETFs, traditional financial capital has significantly onboarded users and funds that originally belonged to exchanges in a more cost-effective, compliant, and transparent manner. The transaction fee revenue of cryptocurrency exchanges has started to decline, and this trend may further intensify in the coming months.
According to Coinbase's 2024 Q4 financial report, the platform's total trading revenue was $417 million, a 45% year-on-year decrease. The contribution of BTC and ETH's trading revenue dropped from 65% in the same period last year to less than 50%.
This decline is not a result of a decrease in market enthusiasm. In fact, since the approval of the Bitcoin ETF in January 2024, the inflow of BTC into the U.S. market has continued to reach new highs, with asset management giants like BlackRock and Fidelity rapidly expanding their management scale. Data shows that BlackRock's iShares Bitcoin ETF (IBIT) alone has surpassed $17 billion in assets under management. As of mid-May 2025, the cumulative net inflow of 11 major institutional Bitcoin spot ETFs on the market has exceeded $41.5 billion, with a total net asset value of $1214.69 billion, accounting for approximately 5.91% of the total Bitcoin market capitalization.
Institutional investors and some retail investors are shifting towards ETF products, partly due to compliance and tax considerations. On one hand, ETFs have much lower trading costs compared to cryptocurrency exchanges. While Coinbase's spot trading fee rate varies annually in a tiered manner but averages around 1.49%, for example, the management fee for IBIT ETF is only 0.25%, and the majority of ETF institution fees fluctuate around 0.15% to 0.25%.
In other words, the more rational users are, the more likely they are to move from exchanges to ETF products, especially for investors aiming for long-term holdings.
According to multiple sources, several institutions, including VanEck and Grayscale, have submitted applications to the SEC for a Solana (SOL) ETF, with some institutions also planning to submit an XRP ETF proposal. Once approved, this may trigger a new round of fund migration. According to a report submitted by Coinbase to the SEC, as of April, the platform's trading revenue from XRP and Solana accounted for 18% and 10%, nearly one-third of the platform's fee revenue.
However, the Bitcoin and Ethereum ETFs passed in 2024 also reduced the fees for these two tokens on Coinbase from 30% and 15% to 26% and 10%, respectively. If the SOL and XRP ETFs are approved, it will further undermine the core fee revenue of exchanges like Coinbase.
The expansion of ETF products is gradually weakening the financial intermediary status of cryptocurrency exchanges. From their original roles as matchmakers and clearers to now gradually becoming mere "on-ramps and off-ramps" for funds, exchanges are seeing their marginal value squeezed by ETFs.
On May 12, 2025, SEC Chairman Paul S. Atkins gave a keynote speech at the Tokenization and Cryptocurrency Working Group roundtable. The theme of his speech revolved around "It is a new day at the SEC," where he indicated that the SEC would not approach enforcement and regulation the same way as before but would instead pave the way for cryptocurrency assets in the U.S. market.
With signs of cryptocurrency compliance such as the SEC's "NEW DAY" declaration, an increasing number of traditional brokerages are attempting to enter the cryptocurrency industry. One of the most representative cases is the well-known U.S. brokerage Robinhood, which began expanding its crypto business in 2018. By the time of its IPO in 2021, Robinhood's crypto business revenue accounted for over 50% of the company, with a significant boost from the Dogecoin "moonshot" promoted by Musk.
In Q1 2025 earnings report, Robinhood showcased strong growth, especially in revenue from cryptocurrency and options trading. Fueled by Trump's Memecoin, cryptocurrency-related revenue reached $250 million, nearly doubling year-over-year. Consequently, Robinhood Gold subscription users reached 3.5 million, a 90% increase from the previous year, with the rapid growth of Robinhood Gold providing the company with a stable source of income.
Meanwhile, RobinHood is actively pursuing acquisitions in the cryptocurrency space. In 2024, it announced a $2 billion acquisition of the long-standing European cryptocurrency exchange Bitstamp. Additionally, Canada's largest cryptocurrency CEX, WonderFi, which recently went public on the Toronto Stock Exchange, also announced its integration with RobinHood Crypto. After obtaining virtual asset licenses in the UK, Canada, Singapore, and other markets, RobinHood has taken a proactive approach in the compliant cryptocurrency trading market.
Furthermore, an increasing number of brokerage firms are exploring the same path. Futu Securities, Tiger Brokers, and others are also dipping their toes into cryptocurrency trading, with some having applied for or obtained the VA license from the Hong Kong SFC. Although their user bases are currently small, traditional brokerages have a natural advantage in user trust, regulatory licenses, and low fee structures. This could pose a threat to native cryptocurrency platforms in the future.
In April 2025, security researchers discovered that some Coinbase user data was leaked on the dark web. While the platform initially responded by attributing it to a "technical misinformation," it still raised concerns among users regarding its security and privacy protection. Just two days before Dow Jones Indexes announced Coinbase's addition to the S&P 500 Index, on May 11, 2025, Coinbase received an email from an unknown threat actor claiming to have obtained customer account information and internal documents, demanding a $20 million ransom to keep the data private. Subsequent investigations confirmed the data breach.
Cybercriminals obtained the data by bribing overseas customer service agents and support staff, mainly in "non-U.S. regions such as India." These agents abused their access to Coinbase's internal customer support system and stole customer data. As early as February this year, blockchain detective ZachXBT revealed on X platform that between December 2024 and January 2025, Coinbase users lost over $65 million to social engineering scams, with the actual amount potentially higher.
Among the victims was a well-known figure, 67-year-old Ed Suman, an established artist in the art world for nearly two decades, having been involved in the creation of artworks such as Jeff Koons' "Balloon Dog" sculpture. Earlier this year, he fell victim to an impersonation scam involving fake Coinbase customer support, resulting in a loss of over $2 million in cryptocurrency. ZachXBT critiqued Coinbase for its inadequate handling of such scams, noting that other major exchanges have not faced similar issues and recommending Coinbase to enhance its security measures.
Amidst a series of ongoing social engineering incidents, although there has not been any impact on user assets at the technical level so far, it has raised concerns among many retail and institutional investors. Especially institutions holding massive assets on Coinbase. Just considering the U.S. BTC ETF institutions, as of mid-May 2025, they collectively hold nearly 840,000 BTC, and 75% of these are custodied by Coinbase. If we price BTC at $100,000, this amount reaches a staggering $63 billion, which is equivalent to the nominal GDP of two Iceland in the year 2024.
In addition, Coinbase Custody also serves over 300 institutional clients, including hedge funds, family offices, pension funds, and endowments. As of the Q1 2025 financial report, Coinbase's total assets under management (including institutional and retail clients) reached $404 billion. The specific amount of institutional custodied assets was not explicitly disclosed in the latest report, but it should still be over 50% based on the Q4 2024 report.
Once this security barrier is breached, not only could the rate of user attrition far exceed expectations, but more importantly, institutional trust in it would undermine the foundation of its business. Therefore, after a hacking event, Coinbase's stock price plummeted significantly.
Facing a decline in spot trading fee revenue, Coinbase is also accelerating its transformation, attempting to find growth opportunities in derivatives and emerging assets. Coinbase acquired a stake in the options platform Deribit at the end of 2024 and announced the official launch of perpetual contract products in 2025. This acquisition fills in Coinbase's gap in options trading and its relatively small global market share.
Deribit has a strong presence in non-U.S. markets, especially in Asia and Europe. The acquisition has enabled Coinbase to gain a dominant position in bitcoin and ethereum options trading on Deribit, accounting for approximately 80% of the global options trading volume, with daily trading volume remaining above $2 billion.
Meanwhile, 80-90% of Deribit's customer base consists of institutional investors, with their professionalism and liquidity in the Bitcoin and Ethereum options market highly favored by institutions. Coinbase's compliance advantage, coupled with its already robust institutional ecosystem, makes it even more suitable. By using institutions as an entry point, it can face the squeeze from giants like Binance and OKX in the derivatives market.
Facing a similar dilemma is Kraken, which is attempting to replicate Binance Futures' model in non-U.S. markets. Since the derivatives market relies more on professional users, fee rates are relatively higher and stickiness is stronger, making it a significant source of revenue for exchanges. In the first half of 2025, Kraken completed the acquisition of TradeStation Crypto and a futures exchange, aiming to build a complete derivatives trading ecosystem to hedge the risk of declining spot transaction fee income.
With the surge of Memecoin in 2024, Binance, OKX, and various CEX platforms began massively listing small-market-cap, highly volatile tokens to activate active trading users. Due to the wealth effect and trading activity of Memecoins, Coinbase was also forced to join the battle, successively listing popular tokens from the Solana ecosystem such as BOOK OF MEME and Dogwifhat. Although these coins are controversial, they are frequently traded, with fee rates several times higher than mainstream coins, serving as a "blood-boosting" method for spot trading.
However, due to its status as a publicly traded company, this practice is a riskier endeavor for Coinbase. Even in the current crypto-friendly environment, the SEC is still investigating whether tokens like SOL, ADA, and SAND constitute securities.
In addition to the forced transformation strategies carried out by the aforementioned CEXs, they are also starting to lay out RWAs and the most talked-about stablecoin payment fields, such as the PYUSD launched through a collaboration between Coinbase and Paypal, Coinbase's support for the Euro stablecoin EURC by Circle that complies with EU MiCA regulatory requirements, or the USD1 launched through a collaboration between Binance and WIFL. In the increasingly crowded trading field, many CEXs have shifted their focus from just the trading market to the application field.
The golden age of transaction fees has quietly ended, and the second half of the crypto exchange platform game has silently begun.
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Key Market Intelligence on May 14th, how much did you miss out on?
1.Binance Alpha Launches HIPPO, BLUE, and Other Tokens
2.Believe Ecosystem Tokens See General Rise, LAUNCHCOIN Surges Over 250% in 24 Hours
3.Tiger Securities Introduces Cryptocurrency Deposit and Withdrawal Service, Supports Mainstream Cryptocurrencies such as BTC and ETH
4.Current Bitcoin Rally Possibly Driven by Institutions, Retail Traders Yet to Join
5.Binance Wallet's New TGE Privasea AI Participation Requires a 198 Point Threshold, with a Point Consumption of 15
Source: Overheard on CT (tg: @overheardonct), Kaito
PUMP: Today's discussions about PUMP focus on its new creator revenue-sharing model: the platform will allocate 50% of PumpSwap revenue to token creators, sparking varied reactions from users. Some criticize the move as insufficient or even misleading, while others view it as a positive step the platform is taking to reward creators. Meanwhile, PUMP faces market pressure from emerging competitors like LetsBONKfun and Raydium, which are rapidly gaining market share. Users also express concerns about PUMP's sustainability and potential regulatory risks in the U.S., with discussions extending to the platform's impact on the entire memecoin ecosystem.
COINBASE: Today, Coinbase became the first crypto company to join the S&P 500 Index, replacing Discover Financial Services, sparking widespread industry attention. The entire crypto community views this milestone as a significant development, signaling that crypto assets are further integrating into the mainstream financial system. The news has sparked lively discussions on Twitter, with many users pointing out that this may attract more institutional investors to enter the Bitcoin and other cryptocurrency markets.
XRP: XRP became the focal point of today's crypto discussion, with its significant market movements and strategic advances drawing attention. XRP has surpassed USDT to become the third-largest cryptocurrency by market capitalization, sparking market excitement and discussions about its future potential. The surge in market capitalization and price is believed to be related to increasing institutional interest, deepening strategic partnerships, and its role in the crypto ecosystem. Additionally, XRP's integration into multiple financial systems and its potential as a macro asset class are also seen as key factors driving the current market sentiment.
DYDX: Today's discussions about DYDX mainly focused on the dYdX Yapper Leaderboard launched by KaitoAI. The leaderboard aims to identify the most active community participants, with a total of $150,000 in rewards to be distributed over the first three seasons. This initiative has sparked broad community participation, with many users discussing the potential rewards and the incentive effect on the DYDX ecosystem. Meanwhile, progress on the ethDYDX to dYdX native chain migration and historical airdrop events have also been topics of discussion.
1. "What Is 'ICM'? Holding Up the $4 Billion Market Cap Solana's New Narrative"
Overnight, the hottest narrative in the crypto space has become "Internet Capital Markets," with a host of crypto projects and founders, led by the Solana ecosystem's new Launchpad platform Believe, releasing this phrase. Together with "Believe in something," it has become the new slogan heralding the onset of a bull market. What exactly is the so-called "Internet Capital Market," will it become a short-lived hype phrase like the Base ecosystem's previous Content Coin, and what related targets are available for selection?2.《LaunchCoin Surges 20x in One Day, How Did Believe Create a $200M Market Cap Shiba Inu After Going to Zero?｜100x Retrospective》
LAUNCHCOIN broke through a $200 million market cap today, with the long-lost liquidity and such a high market cap "Memecoin" almost bringing half of the on-chain crypto community CT into the fray. The community is crazily discussing this token, with half of it being FOMO and the other half being FUD. This token, originally issued by Believe founder Ben Pasternak under his personal identity, transformed into a new platform token after a renaming. From once going to zero to a $200 million market cap, what happened in between?May 14 On-chain Fund Flow
Within 24 hours, GOONC's market cap soared to 70 million, could GOONC be the next billion-dollar dog on the Believe platform?
Bitcoin has broken $100,000, Ethereum has surpassed 2500, and is Solana's hot streak about to make a comeback?
The current market is in a state of macro euphoria, with GOONC riding the wave today, skyrocketing 10x in just a few hours, reaching a market cap of tens of millions of dollars, trading volume soaring past 50 million, and rumors swirling that the developer may be from OpenAI (unconfirmed but intriguing enough).
A ludicrous and absurd Solana meme that some actually buy into.
GOONC is a meme coin that has sprouted from the "gooning" subculture, offering no technological innovation or practical use, its sole function being speculation.
It takes inspiration from an NSFW term "gooning," which refers to a person being deeply immersed in certain content (you know what), eventually entering a nearly religious-like trance.
In Reddit (such as r/GOONED, r/GoonCaves) and some counterculture media outlets (such as MEL Magazine in 2020), "gooning" has gradually transitioned from an adult label to a meme-addicted, digital content and virtual self-indulgence synonym, arguably the epitome of Degen spirit.
GOONC is playing around with this concept, packaging the addictive nature, uselessness, and irony of gooning into a tradable financial product. The project team has made it clear: "We do not solve blockchain problems, we only trade absurdity." Blunt but oddly genuine.
GOONC launched on May 13, 2025, using the meme coin launch platform Believe App's LaunchCoin module on Solana. This tool is highly Degen: zero technical barriers, a few clicks to create a coin, perfect for projects like GOONC that can come up with ideas out of the blue.
The mastermind behind GOONC is also quite something and is the most talked-about, with KOL @basedalexandoor on X platform (alias "Pata van Goon") personally involved. His profile even caught the attention of Marc Andreessen, co-founder of a16z, making onlookers unable to resist speculating if GOONC has a hint of OpenAI lineage.
While this 'OpenAI Endorsement' is currently just community speculation, it is definitely a good card to play to fuel hype. Saying "we are pure speculation" on one hand, while tagging a few "AI + a16z" on the other.
GOONC took off as soon as it launched. After its launch on May 13, 2025, its market capitalization skyrocketed to $22 million within 4 hours, with a trading volume exceeding $25.6 million in 24 hours. According to platform data, the first day of trading saw an astonishing +41,100% surge, soaring from $0.0000001 to $0.02, becoming a "missed-the-boat" situation.
GOONC quickly formed an active trading community post-launch, with a lot of discussion and trading signals appearing on X platform (such as the 292x return signal provided by DeBot). Liquidity pools on exchanges like Raydium and Meteora grew rapidly, supporting high trading volumes and price increases.
The real climax occurred between May 13 and May 14, with the market cap rising to $5.5 million in the morning and directly surpassing $55 million in the afternoon. By the 14th, it briefly approached a $70 million market cap, with the trading volume soaring to $59 million. Some community members even posted screenshots claiming an increase of +85,000%, creating a new myth out of the ruins.
As of 1:30 pm on May 14, the price stabilized around $0.039, with a total market cap and FDV both around $39.6 million, and a 24-hour trading volume of $5.43 million. Active platforms include XT.COM, LBank, Meteora, and others.
Although there was a slight pullback from the peak ($0.07), the coin's popularity remains strong. For a coin that relies purely on "irony + community + X post" to thrive, this performance is already at a stellar level.
Currently, the background of the token's development team is not transparent, increasing the potential risk of a rug pull. Rugcheck.xyz warns that the creator of the GOONC contract may have permission to modify the contract (e.g., change fees or mint additional tokens), posing certain security risks.
Community members speculate that the meteoric rise of GOONC may be the "last hurrah".
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After Surging 40%, Has Ethereum Price Peaked Upon Exiting the Craze?
Whether you are an insider or an outsider, these days you must be familiar with the news about Ethereum. The reason is simple, causing Ethereum enthusiasts to sigh with emotion and almost throwing off-guard those who defend Ethereum, Ethereum, with a "3-day surge of 40%," climbed to the top of the Douyin Hot List.
As we all know, Ethereum launched the Pectra upgrade on May 7th. This most significant network upgrade since early 2024 integrates the Prague execution layer hard fork and the Electra consensus layer upgrade, significantly improving Ethereum's performance through 11 improvement proposals. The account abstraction feature (EIP-7702) allows users to flexibly manage wallets through social media accounts or multi-signature schemes, reducing the user threshold, attracting more users and developers. The staking mechanism optimization increases the validator ETH cap from 32ETH to 2048ETH and introduces a flexible withdrawal method, making it easier for institutions and individuals to participate in network security, enhancing the market's confidence in Ethereum's long-term value.
At the same time, Pectra optimized the interaction efficiency of Layer 2 networks such as Arbitrum and Optimism, making transactions faster and cheaper, leading to a surge in on-chain activity. As a crucial step for Ethereum's transition from "2G" to "5G," the Pectra upgrade not only enhances network vitality but also "recharges confidence" in the market, directly driving the price increase.
Related Reading: "Ethereum Skyrockets 22% in One Day, E Enthusiasts Rejoice"
It's not just Ethereum itself, as Wall Street also brought important bullish news.
The world's largest asset management company, BlackRock, proposed to the SEC allowing Ethereum ETFs for staking. This proposal is expected to elevate Ethereum ETFs from a mere investment tool to a bond-like "interest-bearing asset," bringing investors both capital appreciation and passive income, igniting market optimism about Ethereum's future potential.
Specifically, BlackRock has proposed to amend its S-1 filing to allow investors to create and redeem ETF shares directly with Ethereum instead of the U.S. dollar (i.e., in-kind redemption). This move, combined with its $2.9 billion BUIDL Fund launched in March 2024, aims to deepen the integration of traditional finance with blockchain. The BUIDL Fund is a tokenized fund operating on the Ethereum network, investing in traditional assets such as U.S. Treasury bonds. This setup is highly attractive to institutional investors, as they can not only benefit from Ethereum's price appreciation but also earn stable cash flow through staking.
Robert Mitchnick, BlackRock's Head of Digital Assets, stated in a CNBC interview in March 2025 that the addition of staking functionality will significantly enhance the appeal of the Ethereum ETF. He admitted that when the Ethereum spot ETF was launched in July 2024 without staking functionality, the market demand was lackluster, and staking could be the key to reversing this trend.
Meanwhile, the SEC's shifting stance on cryptocurrency regulation has also fueled this upward trend. During the tenure of the previous SEC chairman, the regulatory approach was tough, and staking was strictly viewed through the Howey test as a potential unregistered security. Therefore, when approving the Ethereum spot ETF in May 2024, staking functionality was explicitly prohibited.
However, with Trump back in the White House and Paul Atkins taking over the SEC, there has been a noticeable relaxation in crypto regulation. Apart from BlackRock, ETF issuers such as Invesco Galaxy, VanEck, WisdomTree, and 21Shares have also submitted applications for similar staking and in-kind redemption.
Related reading: "New Chairman Takes Office, SEC Transforms into 'Crypto Daddy' Within 48 Hours"
If staking ETFs are approved, the benefits are likely to go beyond price appreciation. The introduction of staking functionality could redefine the role of crypto assets, making them more similar to traditional financial products that provide returns and value appreciation, thereby driving Ethereum closer to mainstream finance.
Currently, the SEC still needs to address several decisions related to crypto ETFs, including whether to approve ETFs for Solana, XRP, Litecoin, and even Dogecoin. With the calls for an "altcoin season" growing louder, Ethereum's strong performance may just be the beginning of a larger crypto market frenzy.
In addition, the Trump family-related DeFi project WLFI is also bullish on this wave of rise, with frequent on-chain activities. According to on-chain data analyst @ai_9684xtpa's monitoring, a WLFI-related address is currently borrowing coins to go long on ETH, borrowing 4 million U from Aave to buy 1590 ETH at an average price of $2515 per ETH.
For this epic surge of Ethereum after half a year of silence, the community has indeed gained more confidence and hope, which has also led to a revival of the entire altcoin market. However, amidst the joy, there are also voices of pessimism. Below is a summary conducted by BlockBeats based on community discussions.
The optimists point out that the current market structure is similar to the eve of the bull markets in 2016 and 2020, predicting a life-changing surge in the next 3-6 months, where some altcoins may even achieve astonishing single-day gains of up to 40%.
@liuwei16602825 stated that this surge signifies the return of the bull market as a sure thing. There is no need to worry about a pullback. The driving force behind the surge uses a high-cost isolated operation, fearing a drop more than any retail investor and will definitely do everything to support the price.
Related Reading: "Ethereum Leads the Surge Triggering the 'Altcoin Season' Speculation, How Do Traders View the Future Market?"
The bears mainly believe that this surge is different from the bull market of 2021, as the current market lacks the confidence of large-scale retail investors entering and holding positions for the long term, with funds rotating too quickly.
@market_beggar observed that a Bitfinex E/B whale has started to close positions and believes that if this whale maintains its high-speed position-closing operation for the next few days, it can be inferred that the whale no longer sees the upside potential of ETH, preparing to take profits and exit. The closing time will be a key focus going forward.
@FLS_OTC stated that there are still many uncertainties at the macro level, and the liquidity cannot support a major bull market. At this stage, it is a "last hurrah," not a complete reversal, and will continue to remain in a short position.
@off_thetarget believes that after ETH transitioned from POW to POS, it lost the "gold standard" of mining machine power cost support. The staking economic model led to a breakdown in value anchoring. Additionally, the L2 ecosystem (such as Starknet, zkSync, etc.) suffered from liquidity fragmentation, failing to establish an effective capital inflow mechanism, causing the collapse of the split disc pattern. Furthermore, the ETH community's excessive pursuit of technical narratives divorced from real-world needs resulted in a weak ecosystem growth. Therefore, he believes that ETH's intrinsic value system has crumbled, and the price is bound to plummet to the 800-1200 range, with a decisive short position at 1800.
@Airdrop_Guard, based on the core logic of the "High Probability Trading Strategy," where three sets of underlying logic different trading systems (such as volume depletion, price supply-demand, long/short position funding rate, etc.) simultaneously issue a short signal at the same point (2580), creating a high-probability trading opportunity. He emphasizes that these systems must be based on different algorithms and logics (rather than mere technical indicator overlays). The current ETH trend aligns with the short conditions in multiple independent dimensions of his trading system, hence the decision to short.
Overall, Bitcoin still maintains over 54% market dominance, and institutional funds' continued preference for it may limit the altcoin's upward potential. The market's future direction will depend on multiple factors, such as Bitcoin's price trend, global macroeconomic conditions, and whether funds can effectively rotate from Bitcoin to the altcoin sector.
Although Ethereum's recent leadership in the market has brought about optimistic sentiment, investors still need to remain rational as different sectors of altcoins are likely to show divergence in trends. Whether this round of Ethereum's rise will usher in a true altcoin frenzy may require more time and conducive conditions.
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$COIN Joins S&P 500, but Coinbase Isn't Celebrating
On May 13, S&P Dow Jones Indices announced that Coinbase would officially replace Discover Financial Services in the S&P 500 on May 19. While other companies like Block and MicroStrategy, closely tied to Bitcoin, were already part of the S&P 500, Coinbase became the first cryptocurrency exchange whose primary business is in the index. This also signifies that cryptocurrency is gradually moving from the fringes to the mainstream in the U.S.
On the day of the announcement, Coinbase's stock price surged by 23%, surpassing the $250 mark. However, just 3 days later, Coinbase was hit by two consecutive events: a hack where employees were bribed to steal customer data and a demand for a $20 million ransom, and an investigation by the U.S. Securities and Exchange Commission (SEC) into the authenticity of its claim of having over 100 million "verified users" in its securities filings and marketing materials. These two events acted as mini-bombs, and at the time of writing, Coinbase's stock had already dropped by over 7.3%.
Coincidentally, Discover Financial Services, being replaced by Coinbase, can also be considered the "Coinbase" of the previous payment era. Discover is a U.S.-based digital banking and payment services company headquartered in Illinois, founded in 1960. Its payment network, Discover Network, is the fourth largest payment network apart from Visa, Mastercard, and American Express.
In April, after the approval of the acquisition of Discover by the sixth-largest U.S. bank, Capital One, this well-established digital banking company of over 60 years smoothly handed over its S&P 500 "seat" to this emerging cryptocurrency "bank." This unexpected coincidence also portrayed the handover between the new and old eras in Coinbase's entry into the S&P 500, resembling a relay race scene. However, this relay baton also brought Coinbase's accumulated "external troubles and internal strife" to a tipping point.
Over the past decade, cryptocurrency exchanges have been the most stable "profit machines." They play a role in providing liquidity to the entire industry and rely on trading fees to sustain their operations. However, with the comprehensive rollout of ETF products in the U.S. market, this profit model is facing unprecedented challenges. As the leader in the "American stack," with over 80% of its business coming from the U.S., Coinbase is most affected by this.
Starting from the approval of Bitcoin and Ethereum spot ETFs, traditional financial capital has significantly onboarded users and funds that originally belonged to exchanges in a more cost-effective, compliant, and transparent manner. The transaction fee revenue of cryptocurrency exchanges has started to decline, and this trend may further intensify in the coming months.
According to Coinbase's 2024 Q4 financial report, the platform's total trading revenue was $417 million, a 45% year-on-year decrease. The contribution of BTC and ETH's trading revenue dropped from 65% in the same period last year to less than 50%.
This decline is not a result of a decrease in market enthusiasm. In fact, since the approval of the Bitcoin ETF in January 2024, the inflow of BTC into the U.S. market has continued to reach new highs, with asset management giants like BlackRock and Fidelity rapidly expanding their management scale. Data shows that BlackRock's iShares Bitcoin ETF (IBIT) alone has surpassed $17 billion in assets under management. As of mid-May 2025, the cumulative net inflow of 11 major institutional Bitcoin spot ETFs on the market has exceeded $41.5 billion, with a total net asset value of $1214.69 billion, accounting for approximately 5.91% of the total Bitcoin market capitalization.
Institutional investors and some retail investors are shifting towards ETF products, partly due to compliance and tax considerations. On one hand, ETFs have much lower trading costs compared to cryptocurrency exchanges. While Coinbase's spot trading fee rate varies annually in a tiered manner but averages around 1.49%, for example, the management fee for IBIT ETF is only 0.25%, and the majority of ETF institution fees fluctuate around 0.15% to 0.25%.
In other words, the more rational users are, the more likely they are to move from exchanges to ETF products, especially for investors aiming for long-term holdings.
According to multiple sources, several institutions, including VanEck and Grayscale, have submitted applications to the SEC for a Solana (SOL) ETF, with some institutions also planning to submit an XRP ETF proposal. Once approved, this may trigger a new round of fund migration. According to a report submitted by Coinbase to the SEC, as of April, the platform's trading revenue from XRP and Solana accounted for 18% and 10%, nearly one-third of the platform's fee revenue.
However, the Bitcoin and Ethereum ETFs passed in 2024 also reduced the fees for these two tokens on Coinbase from 30% and 15% to 26% and 10%, respectively. If the SOL and XRP ETFs are approved, it will further undermine the core fee revenue of exchanges like Coinbase.
The expansion of ETF products is gradually weakening the financial intermediary status of cryptocurrency exchanges. From their original roles as matchmakers and clearers to now gradually becoming mere "on-ramps and off-ramps" for funds, exchanges are seeing their marginal value squeezed by ETFs.
On May 12, 2025, SEC Chairman Paul S. Atkins gave a keynote speech at the Tokenization and Cryptocurrency Working Group roundtable. The theme of his speech revolved around "It is a new day at the SEC," where he indicated that the SEC would not approach enforcement and regulation the same way as before but would instead pave the way for cryptocurrency assets in the U.S. market.
With signs of cryptocurrency compliance such as the SEC's "NEW DAY" declaration, an increasing number of traditional brokerages are attempting to enter the cryptocurrency industry. One of the most representative cases is the well-known U.S. brokerage Robinhood, which began expanding its crypto business in 2018. By the time of its IPO in 2021, Robinhood's crypto business revenue accounted for over 50% of the company, with a significant boost from the Dogecoin "moonshot" promoted by Musk.
In Q1 2025 earnings report, Robinhood showcased strong growth, especially in revenue from cryptocurrency and options trading. Fueled by Trump's Memecoin, cryptocurrency-related revenue reached $250 million, nearly doubling year-over-year. Consequently, Robinhood Gold subscription users reached 3.5 million, a 90% increase from the previous year, with the rapid growth of Robinhood Gold providing the company with a stable source of income.
Meanwhile, RobinHood is actively pursuing acquisitions in the cryptocurrency space. In 2024, it announced a $2 billion acquisition of the long-standing European cryptocurrency exchange Bitstamp. Additionally, Canada's largest cryptocurrency CEX, WonderFi, which recently went public on the Toronto Stock Exchange, also announced its integration with RobinHood Crypto. After obtaining virtual asset licenses in the UK, Canada, Singapore, and other markets, RobinHood has taken a proactive approach in the compliant cryptocurrency trading market.
Furthermore, an increasing number of brokerage firms are exploring the same path. Futu Securities, Tiger Brokers, and others are also dipping their toes into cryptocurrency trading, with some having applied for or obtained the VA license from the Hong Kong SFC. Although their user bases are currently small, traditional brokerages have a natural advantage in user trust, regulatory licenses, and low fee structures. This could pose a threat to native cryptocurrency platforms in the future.
In April 2025, security researchers discovered that some Coinbase user data was leaked on the dark web. While the platform initially responded by attributing it to a "technical misinformation," it still raised concerns among users regarding its security and privacy protection. Just two days before Dow Jones Indexes announced Coinbase's addition to the S&P 500 Index, on May 11, 2025, Coinbase received an email from an unknown threat actor claiming to have obtained customer account information and internal documents, demanding a $20 million ransom to keep the data private. Subsequent investigations confirmed the data breach.
Cybercriminals obtained the data by bribing overseas customer service agents and support staff, mainly in "non-U.S. regions such as India." These agents abused their access to Coinbase's internal customer support system and stole customer data. As early as February this year, blockchain detective ZachXBT revealed on X platform that between December 2024 and January 2025, Coinbase users lost over $65 million to social engineering scams, with the actual amount potentially higher.
Among the victims was a well-known figure, 67-year-old Ed Suman, an established artist in the art world for nearly two decades, having been involved in the creation of artworks such as Jeff Koons' "Balloon Dog" sculpture. Earlier this year, he fell victim to an impersonation scam involving fake Coinbase customer support, resulting in a loss of over $2 million in cryptocurrency. ZachXBT critiqued Coinbase for its inadequate handling of such scams, noting that other major exchanges have not faced similar issues and recommending Coinbase to enhance its security measures.
Amidst a series of ongoing social engineering incidents, although there has not been any impact on user assets at the technical level so far, it has raised concerns among many retail and institutional investors. Especially institutions holding massive assets on Coinbase. Just considering the U.S. BTC ETF institutions, as of mid-May 2025, they collectively hold nearly 840,000 BTC, and 75% of these are custodied by Coinbase. If we price BTC at $100,000, this amount reaches a staggering $63 billion, which is equivalent to the nominal GDP of two Iceland in the year 2024.
In addition, Coinbase Custody also serves over 300 institutional clients, including hedge funds, family offices, pension funds, and endowments. As of the Q1 2025 financial report, Coinbase's total assets under management (including institutional and retail clients) reached $404 billion. The specific amount of institutional custodied assets was not explicitly disclosed in the latest report, but it should still be over 50% based on the Q4 2024 report.
Once this security barrier is breached, not only could the rate of user attrition far exceed expectations, but more importantly, institutional trust in it would undermine the foundation of its business. Therefore, after a hacking event, Coinbase's stock price plummeted significantly.
Facing a decline in spot trading fee revenue, Coinbase is also accelerating its transformation, attempting to find growth opportunities in derivatives and emerging assets. Coinbase acquired a stake in the options platform Deribit at the end of 2024 and announced the official launch of perpetual contract products in 2025. This acquisition fills in Coinbase's gap in options trading and its relatively small global market share.
Deribit has a strong presence in non-U.S. markets, especially in Asia and Europe. The acquisition has enabled Coinbase to gain a dominant position in bitcoin and ethereum options trading on Deribit, accounting for approximately 80% of the global options trading volume, with daily trading volume remaining above $2 billion.
Meanwhile, 80-90% of Deribit's customer base consists of institutional investors, with their professionalism and liquidity in the Bitcoin and Ethereum options market highly favored by institutions. Coinbase's compliance advantage, coupled with its already robust institutional ecosystem, makes it even more suitable. By using institutions as an entry point, it can face the squeeze from giants like Binance and OKX in the derivatives market.
Facing a similar dilemma is Kraken, which is attempting to replicate Binance Futures' model in non-U.S. markets. Since the derivatives market relies more on professional users, fee rates are relatively higher and stickiness is stronger, making it a significant source of revenue for exchanges. In the first half of 2025, Kraken completed the acquisition of TradeStation Crypto and a futures exchange, aiming to build a complete derivatives trading ecosystem to hedge the risk of declining spot transaction fee income.
With the surge of Memecoin in 2024, Binance, OKX, and various CEX platforms began massively listing small-market-cap, highly volatile tokens to activate active trading users. Due to the wealth effect and trading activity of Memecoins, Coinbase was also forced to join the battle, successively listing popular tokens from the Solana ecosystem such as BOOK OF MEME and Dogwifhat. Although these coins are controversial, they are frequently traded, with fee rates several times higher than mainstream coins, serving as a "blood-boosting" method for spot trading.
However, due to its status as a publicly traded company, this practice is a riskier endeavor for Coinbase. Even in the current crypto-friendly environment, the SEC is still investigating whether tokens like SOL, ADA, and SAND constitute securities.
In addition to the forced transformation strategies carried out by the aforementioned CEXs, they are also starting to lay out RWAs and the most talked-about stablecoin payment fields, such as the PYUSD launched through a collaboration between Coinbase and Paypal, Coinbase's support for the Euro stablecoin EURC by Circle that complies with EU MiCA regulatory requirements, or the USD1 launched through a collaboration between Binance and WIFL. In the increasingly crowded trading field, many CEXs have shifted their focus from just the trading market to the application field.
The golden age of transaction fees has quietly ended, and the second half of the crypto exchange platform game has silently begun.
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